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Squawk on the Street

News/Business. Melissa Lee, Carl Quintanilla, David Faber. Opening bell market action. New.

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03:00:00

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San Francisco, CA, USA

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mpeg2video

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ac3

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480

TOPIC FREQUENCY

Us 34, Jack Lew 25, Comcast 23, Citi 18, Washington 16, Carl 15, U.s. 12, S&p 11, America 11, Costco 9, Ge 8, Zuckerberg 6, Marco Rubio 6, Obama 6, Aflac 6, Nbc 6, Treasury 6, New York 5, Jim Sinegal 5, United States 4,
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  CNBC    Squawk on the Street    News/Business. Melissa Lee, Carl Quintanilla,  
   David Faber. Opening bell market action. New.  

    February 13, 2013
    9:00 - 12:00pm EST  

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value is over. people are going back to find houses for shelter, not for investment. and that's a very healthy trend. but what that means is, going forward, i think the multi-family market is going to outperform. particularly in markets that have their -- they're very difficult to enter. >> what do you consider a market that's hard to enter right now? >> new york, boston, san francisco. i mean, these are difficult environments as opposed to houston where you can do whatever you want, whenever you want to. >> right. >> so i think that the rental housing market i think is going to continue to be very strong. like it was too good and then everybody had to come up with a reason why it wasn't. >> is the home mortgage deduction going to come back on the table? does that have anything to do with the rental issue you're talking about? >> i actually think home mortgage deductions are going to come back on the table. i think they're going to
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ultimately either be eliminated as they were in canada, and when they were eliminated in canada, everybody said, oh, my god, it's the end of the housing market, and it was hardly a blip. or it will be cut to deductions on the first $100,000 or something, so you're effectively protecting the middle class. >> thank you for this. >> yeah, sam, it has been a pleasure having you here today. >> my pleasure. >> we really appreciate hearing from you. sam zell has been our guest host for the last two hours. you're putting your money where your mouth is. it's all about rental properties. >> that's right. >> sam. thank you, appreciate it. that does it for us today. make sure you join us tomorrow. right now it's time for "squawk on the street." good wednesday morning. welcome to "squawk on the street." i'm melissa lee, along with carl
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quintanilla and david faber. jim cramer is off this week. today we've got treasury secretary nominee jack lew heading to capitol hill. let's check on where we stand in terms of u.s. futures. it looks like we'll be building off of multi-year highs here in the u.s. the picture in europe, again, the sort of anti-race to the base movement going on. the euro is moving higher this morning. we see green arrows across the board. overnight in asia, japan's nikkei down by about a percent here. on heavy volume. the yen gaining there. our road map starts in washington, d.c. the president unveiling an ambitious agenda. he also called for billions to rebuild the nation's
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infrastructure. >> the dow is back above 14,000. only 1% away from an all-time interday high. the s&p also near its highest levels since november of 2007. what could help markets today? better than expected earnings from deere and gains by general electric and comcast. >> those big gains because of a big deal. comcast agreeing to buy general electric's stakes. in the mean time, let's send it down to carl in d.c. >> a big night here last night. the president addressing the nation in the first state of the union during the second term. front and center, the economy and bringing jobs back to america. >> after shedding jobs for more than ten years, our manufacturers have added about 500,000 jobs over the past three. caterpillar is bringing jobs back from japan. ford is bringing jobs back from mexico. and this year, apple will start
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making macs in america again. >> tim cook there in the first lady's box. fox played a major role in the address and official republican response. >> our economy is stronger. when we harness the talents and ingenuity of striving hopeful immigran immigrants. >> if we have a legal immigration system to attract the best and brightest. we need a permanent solution to those here legally. we must follow through on the broken promises of the past to secure our borders. >> steve case is the co-founder of aol, chairman and ceo of holding company revolution, chairman of the case foundation and a member of president obama's jobs and competitiveness council. steve, good morning. >> good morning. >> a lot of inflection points in those speeches last night. but the notion of h 1 b,
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immigration, got a huge ovation. i wonder if you think this is real this time, and if so, what has changed? what makes this possible now? >> i think it is a moment there's now bipartisan support for a comprehensive immigration reform approach. i think people in talking about this for more than a decade, in the technology and entrepreneurial community have been talking about stapling green cards to diplomas. now it feels like republicans and democrats are coming together. so hopefully in the next few months we can build this coalition and pass immigration reform with a strong robust high-skilled immigration component. >> you're going to testify today before the senate judiciary committee on this topic. what is the net effect going to be on the effectiveness of startups in this country, on the labor market? because some are still making the market it's actually harmful to americans here, who are living na tifl, who are long-term unemployed. do you agree with that? >> no, i don't. the data shows that the
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immigrant entrepreneurs are typically job makers, create companies that make jobs, not job takers. that's what the evidence has been. the foundation that tracks this said the economy is driven by young high growth startups. 40% of the fortune 500 companies were started by first or second-generation immigrants. now half of the technology companies are started by immigrants. it's driving our economy, and driving job creation. so the place to focus on is entrepreneurship. we need to double down on entrepreneurship and winning the battle for talent, which is what high-skilled immigration is all about, so we can make it essential we remain the most forward going company. >> pre-recession levels, as someone who makes it his business to make it easier to create a business in this country, where are we in that
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narrative? is it getting easier and are we at a point where a lot more people who are thinking about it are going to make that plunge? >> i think i'm optimistic. last year there was bipartisan support for jump-starting our businesses. it got broad support on the house side and passed overwhelming, about 80%. that made it easier for entrepreneurs to get access to capital, like funding and on-ramp for ideas. now we need to start on the startup act introduced today by four senators, which deals with immigration, but also deals with regulation, commercialization of research, buy and hold strategy so we can invest in the industries of the future. so i think we're making progress. there's still work to be done. startup act will be very important. but most important is winning this battle for talent, which is i'm glad the president talked about it last night. senator rubio talked about it as well. i think it got the biggest ovation of the night from
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republicans and democrats. we need to come together and pass immigration reform. >> we heard from some small business people last night via twit tore a large degree, who said the immigration part is great, not so much on the minimum wage part. i wonder how much of an offset that might be to a small business person? >> a lot of things were talked about. it was an hour speech. there was a lot of components to it. i was encouraged when the president talked about they were building the economy. and solving the immigration issue. particularly from president obama and senator rubio, on the high-skilled immigration reform. i view it as a good night. and a hearing in the senate around immigration reformt. and this afternoon we'll hear more from the senators introducing that. we're making good progress. there's a lot of work to be done. immigration has always been a difficult, sensitive issue. it will require broad bipartisan
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support and include the business and tech community to step forward and have their voices heard. the best path to get that passed is to support a broader solution. >> high-skilled, a lot of people argue is the sweet spot in that. >> it is the sweet spot. it is the most important in my view. the best path to get it done is to support this broader reform. >> look forward to your testimony today, steve. thanks for getting up a little earlier for us. >> thank you. >> steve case on the hill. >> you see merck, we'll watch that in pre-market trade here. it says it will post a 5 cents a share loss because of the venezuelan currency adjustment here. this is something we've heard from other multi-national companies. we heard from clorox they will take a one-time after-tax loss as well. that currency will be a major theme going forward. merck shares there, lower by .6
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of a percent. bulls are looking to go after the dow and s&p, finishing yesterday at five-year highs. the dow is 1% away from closing at a record high. ross, great to see you. >> good morning. >> first, let's talk about the state of the union address. i'm curious if there's anything out of that address that makes you rethink your market thesis at all? >> i don't think so. i mean, i think generally, we had a little bit of a preview, the themes we'll see in the inauguration. generally, you know, the issue from the investor's standpoint is washington is still very divided. you've got a different vision for the country from the president as congressional republicans are thinking. the economy is healing. we're seeing improvement in housing and manufacturing and the stock market. for the time being, that's trumping any issues unresolved in washington. >> even trumping a potential
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sequester? at what point do you say that they're trumping it and at what point do you say, you know what, what's coming out of d.c. could put this rally in jeopardy or at least stall it for now? >> i think there is some potential to stall it as we get into february, march. it's not just the sequesters, but also the continuing resolutions that has to be extended by the end of march. our expectations it will get extended, but i think what you're likely to see is something like the new year's eve budget deal. there's half a loaf, this is not a good thing. in a slow growing economy, it would be better if we could minimize the fiscal drag. but i think whatever marginal fiscal drag you're likely to get from the sequester is not a game changer. it adds a little to the speed bump we're likely to see during the first half of the year. i think by the back half of the year we'll see some improvement. >> russ, can i just kick the tires on that optimism there.
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last night, mitch mcconnell, the senate minority leader, said it was pretty clear this sequester is going to kick in, $85 billion from the beginning of march. let's not forget the cbo said it could shave growth and cost 750,000 jobs. that was testimony that came through yesterday. i know we are traditionally complacent on these deadlines set by capitol hill. but in this case, it's awfully close, isn't it? >> it is awfully close, but i would push back a little bit on the nature of the sequester. in some ways the sequester is a very different animal than, let's say, the tax hikes we're going to hit. the tax hikes, again, we did get some of them. we're going to hit on january 1st. the sequester is about spending. it's not as if the world changes on march 1st. some of this may hit for a temporary period, but to the extent that you can mitigate the effect after the fact, two, three, four weeks later, the full brunt that the cbo is
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talking about, that can be effective. so even though we don't get a full deal by march 1st, you could retroactively fix some of this by march. >> thanks for joining us this morning, russ. >> thank you. comcast said gem electric's stake is being sold. the comcast gets full control of nbcu earlier than anticipated. brian roberts on "squawk box" this morning. >> we didn't have to do this now. and we chose to do it. if actions speak louder than words, the action is we know the businesses we're buying. three years since we signed a deal, two years since we closed it. we've seen some early signs of turn-around and payoff for some of the investments we're making, whether it's in theme parks, or in the cable networks, or in the broadcast business or in the film business.
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>> certainly comcast was in a position to do that. it had been harboring cash to a certain extent, $11.4 billion in cash from the company's balance sheet will be used to help purchase that stake, in addition to a note taken back by ge. it's also a story of cheap money. you've got cash on the balance sheet. borrowing from the markets at extraordinarily low rates. we were still somewhat surprised, i have to say, because there was an expectation it would still perhaps kick in next year. they had seven years in which to actually do this. there's also a somewhat complicated part of the transaction that was -- from when it was closed a couple of years ago when comcast equity ecreted over time. perhaps that was used in leverage in the negotiation for
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the price. gives them a lot more money to return to shareholders should they choose to do so. >> it's rare you see a deal happen in both stocks move sharply higher. this is really a story, it's transformation al for general electric. right now it is more beneficial for the company to trade purely as an industrial/financial. those are the sweet spots in the market during this rally. for comcast, they're using, as david mentioned, money that was sitting on the balance sheet, not earning much, and locking in a price at today's value. this is a vote of confidence in nbc universal. and the notion they're getting a better deal today than years down the line. >> that's something brian roberts said. i think maybe with you on "fast money" last night. and repeated it again this morning with the "squawk" team. in likelihood we would have had to pay more down the road. $39 billion overall enterprise value is what nbcu is valued at
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as a result of this deal and last deal. we'll see how it goes. as for comcast earnings, we should point out as well, they did increase the dividend 20%, committed to a $2 billion repurchase this year. that was lower than last year. it is all being viewed rather positively by investors, by the analysts who follow the company. there was an uptick in capital expenditures that might be somewhat unexpected, about $1 billion more. the call has been going on. i'm sure they're going to get some questions trying to figure out where that various money is going to. they certainly made a big commitment to the future of content. we knew it was coming. >> it was just a matter of when it was going to happen. >> exactly. >> for now the stock is set to open at a fresh high. jeff will be in a conference call 9:30 eastern time and we'll have full coverage of that as well. >> the president's choice for treasury secretary will come fully into the spotlight. jack lew is heading to the capitol hill hot seat for his confirmation hearing.
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a lot of discussion about bonuses at citigroup. we'll keep you up to date on what is happening there. one of wall street's top banking analysts, does he think jack lew is the right man for the treasury. let's look at the futures as we look at a higher open here this monday morning on cnbc. but we can still help you see your big picture. with the fidelity guided portfolio summary, you choose which accounts to track and use fidelity's analytics to spot trends, gain insights, and figure out what you want to do next. all in one place. i'm meredith stoddard and i helped create the fidelity guided portfolio summary. it's one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account. how do you keep an older car running like new? you ask a ford customer. when they tell you that you need your oil changed
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jack lew heads to the hill for a confirmation hearing before the senate finance committee. morning, eamon? >> we have a little bit of information about what jack lew will say in the confirmation hearing. look at this statement from his prepared testimony. he's going to say he's a bipartisan character. it's not an abstract idea for me, the fundamental thread that spans my professional life. he'll also talk a little bit of time at citi. that's been controversial, as you guys have pointed out. the question to a lot of lawmakers is, what exactly did jack lew while he worked at citi for the money he collected. he'll describe himself as a changed agent inside citi. he doesn't mention at all in the prepared remarks anything about this fund that he invested in, that was based in the cayman islands. that's likely to be controversial. we're likely to hear several questions about that one. david, the prepared testimony is one thing, but when then get to
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the q&a, they'll bear down on what jack lew has to say. carl. >> eamon, there's some discussion how his grilling might be a little bit light, only because republicans haven't really coalesced around a whole lot of opposition. >> yeah, i think the consensus is, they might bang him up a little bit in the hearing. but the expectation is he'll get through and the president will get his man. jack lew has been scrutinized in the past for a variety of jobs. he's a well-known figure here in washington. a lot of republicans don't like his negotiating style because they don't like where the president is coming from ultimately. but we expect jack lew will get through here. the questions and answers should be interesting in the meantime. >> later on this morning, we'll talk to mike mayo on the impact on banks, if in fact lew is confirmed. aym eamon, thanks a lot.
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the president has spoken. now it's art cashin's turn. find out what he's expecting from today's trading as we count down to the opening bell. republican congresswoman marsha blackburn of tennessee gives her take on the state of the union address. take a look at the futures, get a sense of where we are this morning. we're not looking too bad. more "squawk on the street" from the nyse straight ahead. i know what you're thinking... transit fares! as in the 37 billion transit fares we help collect each year. no? oh, right. you're thinking of the 1.6 million daily customer care interactions xerox handles. or the 900 million health insurance claims we process. so, it's no surprise to you
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about six minutes before the opening bell. let's bring in art cashin. art, what bears watching today? >> well, we're right at probably a great inflection point here. mardi gras was over yesterday. we can hope for a continued celebration today. we're at new five-year highs. we're bumping right up against resistance. what the bulls really need is to perk up the volume a little bit. if they can break out to higher highs on increased volume, there's a ton of money on the sideline and that could sptampee in. it's nice to get the highs, but it's frustrating to do it in baby steps every day. >> ge has not seen this level since october 2008. at 23.12 let's call it. >> a little bit of a deal.
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>> signage changes at the top of 30 rock, nothing too important. >> somebody was pushing to get the sign changed early, i think, last night. >> yes. i did ask about that. >> let me ask you about the currencies. the rest of the world is on fire about the currency moves. almost biblical proportions on the yen. merck has warned importantly because of what happened in venezuela, do ordinary investors, do general american investors have to worry about the currency effects? >> they will, if it turns frantic or hectic. one of the marks of the great depression was currency wars. everybody trying to climb their way out. the big difference then was, everybody was linked to gold. so separating from gold was a clear sign of an outright war. we haven't seen any of that. it is almost as if the central banks are doing a kind of min t
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minuet, if you would, to get currencies in order, sequentially almost. but if it -- if the talk gets a little bit tougher, things could get ugly. >> now we're okay? >> for now, you don't have to stay up nights. >> thank you very much, art cashin from ubs. democratic national chair debbie joins us to talk about the sequester, the automatic cuts that could hit the economy if congress does not take action by march 1st. and a perspective on last night's speech and what's at stake for the travel industry. the opening bell is next. get ready for another big day of trading. recognize me.
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♪ [ indistinct shouting ] [ male announcer ] time and sales data. split-second stats. [ indistinct shouting ] ♪ it's so close to the options floor... [ indistinct shouting, bell dinging ] ...you'll bust your brain box. ♪ all on thinkorswim from td ameritrade. ♪ about a minute to go as we wait for the opening bell to ring on this wednesday morning on wall street. of course, the dow back above 14,000, just 1% away from an interday high. and we're seeing a lot of records here. comcast for one. this would be a record high for shares of comcast, after buying the remaining stake from general
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electric and nbc universal. ge also with the trading at the highest level since october of 2008. so a lot of historical metrics to watch in today's session as we count you down to the opening bell here on wall street. and david, the analysts the deal on the comcast side, that it's great. a lot of analysts saying comcast got a phenomenal deal. >> they love the day it would be freeing cash flow immediately. some of that offset by cap x, that can also be vugsed as a positive reinvesting in the business where they need to and be more competitive. >> the opening bell is ringing on wall street. here's the big board. prothena at the nasdaq is doing the honors there. here we go. as you mentioned, simon, more currency wars, big here. we're watching sizeable moves
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for the past couple of days. for instance, the euro is at 174.73. >> this monumental move in the yen lower. >> yes. >> that is a massive move. merck reports, warning what is happening with venezuela. we're going into now a g-20 meeting in moscow. that is going to be a hot topic of conversation. if you look at the moves, it's much about ge and comcast. david, do you think they're on a journey of discovery of what they can do? you listen to the interviews, that's the impression they try to create, that they moved from number two as a network with nbc, blackstone taught ge how to run the theme parks, harry potter, new franchises, or do you think it's just about the cheap cost of borrowing? >> i think it's all of the above. certainly the fact that money is so cheap and/or earning so little when you put it on your balance sheet motivates them to go out and capture the free cash flow that they're going to be
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able to. that being said, content does appear to be, and of course this can be self-serving, more highly valued. they've benefited from retransmission rights at nbc. there are a lot of different things that have gone their way. cable ratings have been something a bit more challenging than overall in cable universal. the nbc network remains a question mark, many would argue, despite what was a very strong performance in the first -- or i should say in the latter half of last year. so we'll see. but all of those things you say are part of this deal, and why it's embraced by shareholders. >> what was most interesting in the interview this morning is when andrew asked him about whether there should be a premium channel for sports of the he basically opened up, suggesting maybe that would be worthwhile. that could break the business model, doesn't it? in terms of cable? don't they have to align themselves with sports? have a single platform that
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carries sports. >> but the idea is to create something that would rival an espn. by the way, that's been the aspiration of a lot of different content providers, whether it be newscorp with its fox sports, nbc has lots of different sports properties. everybody wants to get those subsidies that espn has. sports programming costs are one reason why costs continue to go up for you at home. >> let's talk about other movers on the street. we're watching shares of deere. at first blush, looked like the earnings were good. but you did go underneath, and it does look like there's a push/pull going on in terms of the high grain prices, which would enable farmers to buy more machinery, versus the pull that it's getting from the cattle farmers because they can't afford as much machinery. it's an interesting give-and-take for the business lines at deere. they raised their 2013 estimates. and interestingly, they also
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said industrywide in the u.s. and canada will remain flat. that's because the high grain prices hurting the cattle farmers, helping the grain farmers, helping the sales to the grain side of things. but again, yielding flat results there. deere shares down by 1.86%. another big mover, this came out after the bell, but watch this move. down 15% right now. they cut their dividend by about 75%, getting a couple of downgrades this morning from deutsche bank to a hold. price target $38 a share. citi is also down. when you hear a company cutting dividends 75%, that's usually not a good sign. not a vote of confidence in the iron ore market. >> should take a look at shares of ge, which are approaching a 3% gain on the session. that, of course, also helping the dow. although it's a price weighted average. and ge doesn't have a very high price, so to speak.
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but it's a lot higher than it's been in a long time, $23.24. it's funny not thinking of ge not associated with our nbc universal. it's been as long as i've been a member of this network. the majority owner, of course, taking it forward. properties at 30 rock, not the building itself, but what nbc, and then our headquarters in englewood cliffs, new jersey. increasing at least the range of their buyback. we expect to hear from jeff in a conference call that began moments ago. we'll share that with you. this stock has not seen that level since october of 2008. >> funny to think the "30 rock" series concluded, with cabletown buying the entire company. here we are at this moment in real life. a series of parallels, our company for so long.
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>> they were sears. they knew what they were doing. >> geniuses. >> comic geniuses. >> great show. no longer. >> you were on the final episode, were you not, the voice? >> you had to listen very closely. i'm going to miss that show. >> take a shares of netflix. amazing we're about $9 away from 52-week highs on netflix. up by 1.5%. jpmorgan out this morning, lifting its price target, $206 a share from $180, reiterating the overweight on the stock. they're saying it is the most watched program on netflix. it gives optimism about the original content. especially as they did enter another deal with dreamworks to embark on a series. >> that approach that they had,
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where they put the entire ser us up at one time. >> exactly. >> that will be an interesting test for other programmers. this all lends itself to this discussion about the value of content. netflix didn't exist that many years ago. now, of course, it does exist for the likes of nbc, when many others who benefited enormously from the ability to sell content they already paid for. didn't want to come to dell shares. let's take a look right now. had an interesting note out this morning, 1381 on dell. from tony over at bernstein, who is, i think, realistic in terms of still with, yes, there is mounting pressure here with southeastern, with t-rowe, a number of other shareholders. you do have to keep an eye on the math here. and it is still going to be a difficult fight one would expect. as i pointed out many times. we'll see. there are months to go until we actually see this vote. it is interesting, certainly something to pay attention to.
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that stock trading at 1380. even if you were to get an increase, how big could it be. there are a lot of shares outstanding. it's not like clearwire where you can make a significant increase. it's not going to cost you a lot. here, it costs substantial, with the likes of michael dell. we'll see. >> they do keep the price target at $15 a share. i thought it was interesting, to the risk/reward balance. of course, in the journal today, there was that article about lbos, and how historically there has been an increase in price in lbos after the original deal price is put out there. but as for whether or not we're -- >> we're going to get a very detailed proxy. revealing more than you typically would, because it is a management led buyout, if you will. we'll look closely at that. in terms of strategy, we'll see what the thoughts are from dell.
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>> courtney, good morning. >> i was going to start with a check on the broader market. dow up only 5. it looks like the nasdaq up about 9 points. s&p 500 hanging higher, but only by a couple points there as well. if we can bring the conversation back to ge and comcast, because this really is what the floor is talking about. comcast hitting new historic highs. ge moving higher, but not quite at the multi-year highs yet. since the joint venture was announced on december 2nd, just a couple of years ago, comcast has really been the outperformer here. i wonder if jack is going to swoop in and give us all a new talk as comcast takes over officially for our entire company. i think we can move on to the hmos. interesting space here today. welfare announcing their earnings, they beat on the top and bottom line. their guidance a little disappointing. it's lifting the sector and actually lifting the hmo index at an all-time high.
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we'll watch that today. the housing stocks moving higher. the momentum continues here today midweek. but it's not all good news. we know that you mentioned the cliffs natural resources, not when it comes to cutting dividends, despite the fact they beat on earnings. that's weighing on the stock. could potentially weigh on the broader sector as we watch momentum there throughout the day. moving on to dean foods, those shares also under some pressure, after they issued the below street estimates for their guidance, mentioning milk prices having an impact. analysts concerned about chicken prices. we're going to watch it throughout the earnings season and going into the spring. last but not least, take a look at jcpenney, shares actually higher. that's after the company announced to increase its ability to borrow. ron johnson telling me last week they have not tapped their revolving budget, opened the possibility for the future. a lot of analysts are concerned, but shares are higher
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nonetheless. rick santelli in chicago, what's shaping up there? >> what's shaking is the run in equities is finally starting in a small way. or a big way depending on what your position in the market is, to affect the fixed-income market treasuries specifically. so let's go through the litany. as you look at an interday of 10s, we're up about four basis points. here's what's fascinating. let's go back to the comps of the main maturities. let's start out with the 5-year, going back to april 9th. the last time we had a close that was 90 basis points or higher. these are the new records. it goes back also on the 10-year, as you can see, to early april. but the winner going back to april 5th at this point, as least, trading close to 3.75, is the three-year bond. we're all comeping to the early parts of april. and the run-up in large part has
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been fueled by lots of put buying yesterday, of course, as the equities are making runs for all-time highs. now, if you look at the boom market, it jumped, just shy of 170, trading 169 briefly after settling around 162 yesterday. but on the 30th of january, they did have a 171 high yield close. as you open that chart up to april, we have one sticking point. but pretty much the flight to safety is alive and well, and the patterns are almost identical, whether you look at eurozone or u.s. simon, back to you. >> thank you very much, rick. oil is slightly higher so far this morning. sharon epperson is checking the trades at the nymex. good morning. >> good morning, simon. oil is actually pushing against a critical level here. it did top $98 a barrel. a close above that will be significant. as oil prices are climbing and perhaps breaking out toward the $100 level, it was interesting in the president's state of the union address last night how
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much he focused on clean energy and on creating an energy security trust, using revenues from oil and gas industry to kind of get cars and trucks in the u.s. off of oil for good. and talked about cutting the red tape on gas and oil permits. that will have a longer term impact on prices, but today traders are buzzing about what happened overnight. the report from the american petroleum institute showed a decline in u.s. crude supplies. that's one factor supporting u.s. oil prices. add to that the international energy administration saying that opec production was actually at the lowest level in a year last month. so even if demand starts to come back, they did lower their forecast overall for global demand. if it starts to come back, that could be an issue with spare capacity. we'll find out a lot more about what's happening with the u.s. oil supply picture at 10:30 a.m. we'll get the report from the energy department. >> when we come back, republican congresswoman marsha blackburn
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of tennessee voted no on the fiscal cliff bill. how does she feel about the automatic spending cuts that could occur if congress cannot reach an agreement by march 1st. and then later on, jim, the co-founder, former ceo of costco, how does he think a minimum wage hike could affect businesses across the country. "squawk on the street" live from washington, d.c., is back in a moment. [ male announcer ] any technology not moving forward is moving backward. [ engine turns over, tires squeal ] and you'll find advanced safety technology like an available heads-up display on the 2013 lexus gs. there's no going back.
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less than a week since senator marco rubio tweeted his frustrations with apple. take a listen. >> nothing has frustrated me more than false choices like the one the president laid out tonight. the choice isn't just between big government and big business. >> that brings us to this
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morning's squawk. >> it was a tough gig. >> exactly. >> other than samsung and golden spring, what product shid mshoud marco rubio be a spokesman for? it was an ungraceful move to get -- to go out of frame and get the bottle. do i do it, do i not? >> the irony is a lot of people saw that as him opening his campaign for the candidacy of the gop last night. for 2016. because of the way in which he addressed it. it was much more to the rank and file to the gop than mainstream america. >> that's true. we're also saying it neither helped nor hurt him. >> no. >> it was sort of middle of the road. and unremarkable. aside from the -- >> a young politician. mark zuckerburg is hosting a
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fund-raiser tonight for new jersey governor chris christie who is seeking reelection. jane wells is at the expo in california. good morning, jane. >> hey, simon. this is a massey ferguson wind rower, can be yours for $175,000. farmers have money and they're spending it despite the drought. the usda said the good times may not last. we'll talk about it after the break. revolutionizing an industry can be a tough act to follow,
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the deficit front and center in last night's state of the union with the upcoming sequester looming. congresswoman marsha blackburn joins us this morning. good morning to you, congresswoman. >> good morning. >> a lot of discussion about the number of initiatives that the president proposed last night. and the costs that you would think would come along with those. he says it wouldn't raise our deficit by a single dime. i wonder how that phrase is ringing in your head this morning? >> well, we're trying to figure that out. you know, i felt like we needed a ticker running beside him,
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talking about how much all of this was going to cost. look, we're borrowing 46 cents of every dollar that we spend. we can't afford the spending that we've got now. you're talking about this new, that new, adding this, expanding that. i don't know how he thinks he can do this, and it not add to the deficit and, of course, the long-term debt. by the way, he's right at $6 trillion added to that debt since he took office. and this year every individual has over $53,000 worth of that debt as their responsibility. that's more than the average salary. the average income, household income for americans. and people are so tired of this out-of-control spending, they're focused on how we reduce what the federal government spends, how we reduce what the federal government takes out of their paycheck, and how we get this economy growing again.
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>> where does it leave us come march 1st? we've all talked about the comments from mitch mcconnell yesterday. it looks like this is going to happen in some way. i just wonder if either party is prepared to start furloughing civilians from the military by the hundreds of thousands? >> you know, the sequestration is going to take place. of course, you've got people like me who are all for across-the-board cuts in that discretionary component. i don't support what they're doing to the military, because carl, the military has already taken nearly $500 billion in reductions. and it's not wise cuts. our priority, first priority is to provide for the common defense. so the military taking an unfair share of that is not a wise move. i do think when you look at the fact that discretionary spending has gone up about 34% since, you had all of this stimulus and the
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extra funds coming in. there is a way to get in there and reduce even more, to get back to those pre-pelosi or pre-stimulus levels, where it is a more responsible and responsive government to the needs that our citizens have. >> busy morning for you, congresswoman, and for us. appreciate your time very much. >> absolutely. good to be with you. >> marsha blackburn from tennessee. let's get back to mary thompson who has the latest on the ge conference call. ge the leading gainer on the dow at this hour. >> that's right. i believe it's at a 52-week high as well. the company ceos taking questions on a conference call that started at 9:30 eastern, both of them calling the price they received for the 49% of nbc universal an attractive exit price. it also walked through while it expects to lose 6 cents of earnings from nbc universal, this will be offset by
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structuring and share buybacks. the company will buy back about $10 million worth of stock this year. this gets closer to the goal of reducing the share count to below 10 billion shares. also, an important note here, the company's cfo keith sharon saying that the exit of nbc universal should allow it to increase the margin expansion it targeted for 2013. in a targeted margin expansion for its industrial businesses of about 70 basis points. he said, this could expand it a little bit further. lastly, on acquisitions, the principal focus for future acquisitions remains smaller. between 1 and $3 billion. >> interesting, mary. trading the buy on ge for 2014. further down the line. the farm equipment deere posting better than expected quarterly earnings. and rating the four-year
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guidance. the results coming out as the global agriculture industry event gets under way on the west coast. jane wells is at the expo in the heart of california's central valley with more. it looks big. >> yes, it is, simon. they're expecting 70,000 people from 70 countries for this show. you mentioned, you've been talking about it, it really tells the snapshot of farmland in agricultural beating the street, raising guidance. now, farmers are coming here, this is really steinbeck country. a great american novel "grapes of wrath." predicting record farm incomes this year. but you're saying, what about this drought we had? overall the crops that survived got top dollar, and there was farm insurance for a lot of farmers. but the good times may taper off with the usda predicting farm
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incomes could fall as much as a third. >> there's bound to be softening in some of those prices, so i don't know if i would characterize it as the boom being over. yes, i do see some lessening. but we've come off some record years. >> right now, we're calling the tractor and combine markets flat for north america. the tractor market itself, we anticipate, will be a little bit more aggressive than that, just based on the recent number releases. combines are appearing to be a little bit more flat. >> now, mark says combine sales may dip a little because they're coming off sales 25% above normal. but adco he said is gaining market shares. but look here, the association of equipment manufacturers says 2013 is off to a good start with an 18% jump in two-wheel drive tractor sales. once things get going, i'm going
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welcome back to "squawk on the street." business inventories for december coming in at up .1 of 1%. that's about half of what we were expecting. november's number released up .3, now stands at .2. somewhat of a wash. and consider this, of course, that is -- this is the last of the inventory numbers that will figure into revisions. originally released for the fourth quarter. receiving that at the end of the month. of course, inventories are one of the components that will ep and flow that number a bit. melissa lee, back to you. >> thank you very much, rick santelli. let's get a check on the market's reaction here. we're sitting at five-year highs. the dow jones industrial average firmly above 14,000.
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14,010. although we are down by eight points. s&p higher by 4. and nasdaq up 16 points. >> we've got another dose of breaking news. the senate finance committee about to convene for jack lew. lew is expected to win confirmation from the full senate. i go in kind of feeling good about the guy. he's a queens boy like me. >> there's a lot of united states senators feeling good about the guy. he's going to get some tough questions. we have a little snippet of what he'll say in his prepared testimony. he'll say our top priority is to strengthen the recovery by fostering private sector job creation, and economic growth. he's also going to talk about bipartisanship. he is going to mention his brief tenure inside citi. he's going to refer to himself a little bit as a change agent inside that financial
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institution. some of the hostile questions will be on the issue of his investment in a cayman island based fund, the very same type of fund that president obama has bashed in the past and said it's leading to tax avoidance. lew had investments in one of those cayman funds. you can expect some senators will point that out and say that's hypocrisy and want to know more about it. as you say, david, we're expecting that lew will get through this. you look at what happened with chuck hagel last week, flat performance in his confirmation hearing for secretary of defense. if you don't do this well, it can really damage your chances, guys. >> eamon, thank you for that, joining us on capitol hill. the lew testimony will begin momentarily. the speaker of the house, john boehner, with his own presser today, in the wake of the state of the union last night. we'll take a brief listen in to that. >> the president laid out no
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blame to the sequester. republicans have twice passed bills to replace the sequester. it is incumbent on the president and senate democrats to show us their plan to stop the sequester from going into effect. >> house republicans this year are going to be about making life for -- >> there's eric cantor as well as headlines as a result of that presser. in the meantime, joining us with perspective on the democratic agenda, florida congresswoman and dnc chair debbie wasserman schultz joins us on the set. thank you for being here. >> thank you for having me. >> we talked about the big efforts he's trying to couple cities with manufacturing, trying to bring jobs back to people and the cities that have lost them. i just wonder what was new about last night? >> i was really proud of the president's speech, because it
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highlighted particularly when it came to the economy. some new bold initiatives that really need to -- really designed to move the needle. because there's been a lot of criticism, not just of the president, but of the republicans and washington in general, that, you know, same old same old tired proposals. the proposal to create manufacturing innovation institutes around the country, we have one in youngstown, ohio. the president proposed a the least 15, and 5 over the next couple of years. that's going to allow us to make the kind of investments to make sure we can make things in america again and revitalize some of the communities decimated by the fact that factories have moved out of town. coupling those communities with businesses so we can make sure we can locate high-tech jobs and make them hubs for high-tech jobs. >> how to further that, when obviously the main concern is still the cost, right? it's still the deficit. it's still these deadlines we'll face in a matter of weeks. >> that's why we need a balanced
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approach to deficit reduction. that's what the president started off with right at the top. we've done $2.10 trillion in deficit reduction already. we've got to do it in a balanced way. it can't be cuts only. cuts only would be devastating to what's already a fragile recovery. >> minimum wage, what's the appetite on the hill? >> well, it remains to be seen. i hope the president talking about the needs to bring americans out of poverty. i mean, $14,500 a year for an american to live on is absolutely unacceptable. hopefully he melted some frozen hearts. increasing it to $9 is the atlanta we can do to make sure we don't have third world wages in the united states of america. >> immigration, too? likely? looking more likely after last night? >> it seemed like it. if you judge by how quickly the republicans stood up -- >> we were joking about the standing ovation earlier today. >> i don't care what the reason is, clearly i think they're more inclined now because of the politics and the fact that the
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president got 71% of the latino vote across the country. we need to get it done. it's important to the economy. undocumented immigrants, 11 or 12 million here, are an important could po nent of the backbone of our country. they would suffer if they were not here. we've got to give them a legal path to citizenship. >> congresswoman, good morning. i, too, am an immigrant, so i would like your interpretation of what we saw last night if possible. it seemed to me that the president was dancing in front of the republican party with a long list of things that he knew they would oppose. come on, man, oppose me in public. it was surely pure politics. he wasn't advancing very much. he knows where the fault lines are in congress. he chooses not to engage with them. he chooses at this stage not to engage on the sequester. and the two sides are poles apart. we have just days before that kicks in. >> come on, the president has a proposal on the table that includes a balanced approach
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with spending cuts and revenue. so that we can address the deficit reduction, so we can make the cuts and deficit reduction necessary. and the reform and tax code that he talked about last night. so that we can set the sequester aside. the sequester was designed to make sure we put pressure on ourselves, so that we don't have to have that kick in. but republicans, unbelievably, are actually talking about allowing the sequester to happen. where is their balanced proposal? it's been nonexistent. >> the president again embarks on three days traveling the country for public opinion rather than walking the halls of congress and banging heads together. >> the only way the republicans are going to understand that americans support these common-sense proposals, to turn this economy around, is to reach out to the people and tell them he wants to work with them. you would have thought that they would have understood that, after the election results
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centered, and the election debates centered around this whole question. clearly they haven't gotten the sglej wh message. >> the message of marco rubio, the speech probably read better than it was delivered. but was the message that he was trying to get across, regarding the reinvention of the gop, did that get lost last night? >> it was a high-pressure moment for anyone. that is an opportunity to be on the stage in front of millions of people, get a message across and be the voice of the opposition. and marco is a nice guy. i think actually he had a little bit of a struggle last night. but beyond the extremism that he didn't move away from, yesterday marco rubio did something even more important, and worse, he voted no on the violence against women act in the senate. how can he do that. how could -- what showed that he wasn't ready for primetime was
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not just how he delivered that speech, but that he voted against making sure we can protect women there domestic violence in this country. >> congresswoman, thanks for coming in. >> thank you. >> live shot there of the chair of the senate finance committee, max baukz. bake us. baucus. >> multi-year highs, key to the rally in washington. we'll look how the beltway is impacting wall street. one of the street's top banking analysts is here. does mike mayo think jack lew is right for the treasury? ♪ [ engine turns over ] [ male announcer ] we created the luxury crossover and kept turning the page, writing the next chapter for the rx and lexus. this is the pursuit of perfection. because what you don'tuhapter know can hurt you.rance.us.
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dow and s&p 500 hitting levels they have not seen since 2007. but can washington derail this rally. the chief market strategist at bannion partners, bob is here. good to see you. >> thanks for having me. >> the s&p 500 up almost 6.5% so far this year. do you agree with the notion that the rally won't continue or is it strong enough to proceed? >> i think it's strong enough to proceed, but i think it will probably present a bump in the road. heading into the sequester, it will raise a lot more issues. it will raise questions about the strength of the economy, to be able to move forward. we also have the budget talks going forward after that. you know, last night people were hoping for an olive branch
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offered by the president to the republicans. we understand that the president and john boehner really don't like each other and they had this problem with each other. boehner came to the president heading into december with offering of about $450 billion worth of tax -- with additional revenue, and the president said, you know what, i've been reelected and we're not going to play that game. that's completely off the table. what the government has to do is really start to work together for the benefit of the people that are out there. last night's speech offered up some hope, in the ability to maybe reinvest in the overall economy, by infrastructure rebuild and repair. that was somewhat encouraging. i think it's a little bit short. i don't think it goes far enough and there's a question of how they will pay for that. >> i want to hone in on infrastructure spend, bob. prior to the state of the union speech, you said this could be an ininvestigate act thesis. but you just said now it didn't go far enough. is it off the table, as a sector you could invest in that the
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government is going to be pumping billions in to rebuild? >> you're probably in the bottom of the eighth. man out, man on, best hitter up at the plate. is he going to hit the ball out of the park? likely not. it's not going to win you the game. >> let's bottom line this. this is a lot of metaphors going on here. is it investable at this point? >> i would alter my investment thesis. >> bob, is a $9 an hour minimum wage good for the markets on the economy or bad for the markets on the economy? >> it's said to scare away small businesses from hiring the underskilled workers for now positions. it raises their costs, and it doesn't really go far enough in order to help the underprivileged and the people that are bordering on just making it through life. i think it's probably better than nothing. but i don't think it goes far
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enough. i don't think you're going to see much in the way of an overall passage of something like that. >> did you change your investments at all, bob, before we go into the budget talks that you mentioned? and the possible sequester? >> no. what we've done is we've rebalanced our portfolios for what's going on in the overall economy. you're seeing improvement in auto sales, improvement in employment, not the levels we'd like to see. you're seeing a pickup in manufacturing. housing continues to show an improvement coming off the lows. so our outlook is that you're going to see an economy growing around 2.5%. you're going to see a continuation of the improvement in corporate earnings and corporate revenue. we're looking for the sectors of the economy that are going to outperform the overall market. those will be the early cyclicals, things like energy, industrials, consumer discretionary. but it's not predicated on what the federal government is doing. >> you wouldn't be concerned that the retail sales growth was
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announced as a little disappointing today because of the tax hikes that came through on the payroll and the prospect that during the course of the year, the american consumer might retrench? that's not the bigger picture from your point of view? >> i think that will eventually be factored in and you'll be able to move forward. i haven't heard anybody say i'm not going to go out and buy a new refrigerator because my taxes are too high. >> you haven't? >> no. >> you live in a different world than i do. >> if they need a new refrigerator, they go out and buy one. it's not based on their taxes. >> what if they say i'm not going to go to my local mnl donald's because my payroll taxes are up $20 or $30, or i'm not going to buy as much gasoline? those are realistic prospects, isn't that potentially what we're seeing in the consumer discretionary? >> you could potentially see that happen. it's not going to be based on taxes. they're going to see their checks are a little bit lower.
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they may go to mcdonald's a little bit less but they'll still go to mcdonald's because they offer value. they go to yum brands, kentucky fried chicken, taco bell because it offers values. they may not be going to the macy's or nordstrom's, but they'll go to walmart and target and mcdonald's, and kentucky fried. i think that's what you're going to see, sort of a trade down. but you're not going to see an absolute escape from that, those particular areas. >> all right. bob, got it. thanks for your time. >> you're very welcome. >> after the break, why it may be wiser to double down on investing in luxury hotels. we're going to check in with the ceo of choice hotels next. plus, a member of the senate republican leadership offers up his thoughts on the countdown to the automatic spending cuts on march 1st. senator john barrasso from wyoming joins us live later on.
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the cnbc snapshot is sponsored by interactive brokers. great, everybody made it. we all work remotely so this is a big deal, our first full team gathering! i wanted to call on a few people. ashley, ashley marshall... here. since we're often all on the move, ashley suggested we use fedex office to hold packages for us. great job. [ applause ] thank you. and on a protocol note, i'd like to talk to tim hill about his tendency to use all caps in emails. [ shouting ] oh i'm sorry guys. ah sometimes the caps lock gets stuck on my keyboard. hey do you wanna get a drink later? [ male announcer ] hold packages at any fedex office location. hey do you wanna get a drink later? try running four.ning a restaurant is hard, fortunately we've got ink. it gives us 5x the rewards
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8% of all rooms booked across the united states are through the choice hotel brand. for years they limited the need for capital expenditure and enabled them to generate industry-leading returns. but the new normal, is the franchise model running out of steam. joining us here, steven joyce is here. in order to generate growth in the present environment, you're actually lending people money. you're putting i think $68 million on the table for other people to get growth in arizona, in texas, and new york. is the franchise model running out of steam? >> not only is it not running out of steam, we threw a couple more coals on the fire last year. we're very excited about where we're going. very positive environment. where we're putting that money is in a new brand we're
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launching called cambridge suites. the financing market for those kind of deals is still a little tight. and what we find it helps push that deal over the edge. a great investment for us. they'll rotate quickly. we expect those moneys to go in and out. and utilize those to do more deals in the future. so while it's a little different than we've done before, it's actually a very positive thing. >> is that an admission that perhaps you're in the slower growing areas in that economy section of the market across america, and the money made is in luxury? will you driver it further up the value chain? >> i don't see us in luxury. we're interested in the upscale space. we're primarily moderate positioned for that growth based on fourth quarter and this year's forecast is going very well. but the reality is, there's lots of space for us in upscale. we've got two brands we're focusing on, cambria suites and ascend, which are doing very, very well. we're excited about the idea of
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choice has always been the hotel company that was loalong the wa you were going. now we want to be the place you stay when you get where you're going, which includes the resorts that we did with blue green and ascend. and a lot of urban destinations for cambria, we'll be able to service a broader section of the public. >> in terms of your moving up the chain, so to speak, does that reflect on what's going on in the economy in materials of who is spending money right now and who you expect to spend money? >> if you look at what's the fastest growing segment, it is the upscale space where the hotels are a little more expensive. it's in the $100 to $125 range. that's where you see the most of the demand growth. that's why we want to be there. >> you run call centers. did you watch president obama last night and his call for $9 minimum wage? >> i did. >> does it impact your business? >> it certainly would, if you went to that level. look, we believe in the end, the
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market dictates what wages should be paid. minimum wage, while it sets the floor, is typically not where wages go. they go based on demand. i think the administration would be much better focused on growing demand for jobs, which will push wages. >> would you lay off staff if the minimum wage went to $9 or would you retain the staff that you have? that's the big economist debate. >> the great thing for us, our business is growing so rapidly, we're hiring. >> it would not change your hiring? >> in terms of the call centers you do operate, are they here in the united states or are those outsourced and could this increase the minimum wage, cause you to outsource those jobs? >> we have both. if you push wages for the call centers, that could push more of a moflt for not just our hotels, but others to look for more international solutions. >> you spent 25 years at marriott. you know the business model of going in and running other people's hotels. morning star says actually of
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all the hotels, you have the least dense pipeline. one of the reasons is because you stick by this franchise model. they say it's a strategic error not to have done a marriott and managed hotels for other people, and that franchise isn't working in emerging markets. in china, managed hotels are. >> they're right if you want to to to china. when everybody else is talking china and india, we think europe is right for our model. it wants to be branded. we think that's a huge opportunity for us. we just did a big deal in the uk with nine hotels. it's going to be a lot more with that one company. we're expecting big things in europe this year. that's going to be our focus. we think that matches our model very well. >> congratulations on the jamison deal as well. >> thank you. >> good choice. big mover in today's session. let's send it over to josh lipton. >> melissa, we're watching bank rate, which is in free fall this morning. the personal finance website is
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expecting lower than expected profit. below the street estimates. analysts say the insurance lead vertical, or where users search for insurance rates on the site, continue to underperform. the street taking notice, rbc cuts its price target to $11. sun trust cuts its price target to 14. bank rate at 33% since the ipo in june 2011. melissa, back to you. >> thank you, josh lipton. breaking news on crude oil inventories. plus president obama calling on congress to raise the minimum wage. what impact will it have on businesses. the co-founder and ceo of costco will join us live. [ male announcer ] you are a business pro.
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welcome back. i'm sharon epperson at the nymex. breaking news about u.s. oil supplies. u.s. oil supplies rose in the last week by 560,000 barrels. they rose by 560,000 barrels, now, that is less of an increase than what analysts were expecting. but it is different from what we saw with the industry report last night. the api data showed a decline in crude supplies for the first time in six weeks. and a decline in gasoline supplies of 800,000 barrels. up 800,000 barrels. that also not in line with what analysts were expecting. they were expecting gas supplies to be unchanged.
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what happened with crude prices last week. nearly four times this time of year. this is the time of year people who often use heating oil to heat their homes will top off their tanks. also keep in mind that with that winter storm that we had in the northeast last week, a lot of folks were stockpiling ahead of that weekend. that may be why we're seeing a decline in the heating oil supplies. >> thank you very much, sharon epperson. let's get a check on the market reactions here. we are at multi-year highs with the nasdaq composite, 12-year highs specifically. the s&p up by four, the dow down by six points. a lot of interesting new records for a lot of the sub components of the indices. the transports at a fresh all-time high in today's session. the re-index jumping to a four and a half year high.
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>> we are over one hour in trade. 7:32 on the west coast, 10:32 here on wall street. citigroup hitting new 52-week highs this morning. now at 34% in the past 12 months. dean foods is one of the biggest decliners on the s&p 500, down more than 8%. the nation's largest dairy company reporting a revenue miss, and issuing weaker, foggier guidance. shares of amazon are up 3%. the internet company announcing a licensing agreement with cbs. the deal will expand cbs content made available to amazon's prime video streaming service. just a note on that, the amazon deals are working on friday night when the snow hit new york. i watched argo on amazon. not yet generally out demand, but it was on demand for $15,
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$16 on amazon. it was worthwhile because i wanted to see it. i'm willing to pay $16. those deals are -- time warner cable doesn't do the deals like they used to. >> $5 movies, i would probably watch a $5 movie. >> really? >> talking about movies, the big news of the day, comcast securing full control of nbc universal, $16.7 billion acquisition of the 49% it didn't already own. the nation's largest cable operator buying out that stake that was owned by general electric last night. or i should say after the close. cnbc, of course, is a unit of nbc universal, now soon to be fully controlled and owned by comcast. only one parent will we have. you know, unexpected in some ways, in terms of the timing was the deal. sounded like yoda. but -- >> wow. >> i said that backwards. unexpected in timing was the deal. i'll start talking like that all the time. a new comcast way.
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no. the deal itself, though, of course, was part of the original transaction that was closed a couple of years back. however, comcast had seven years from that date to acquire the rest. put option involved. they chose to move ahead more quickly than some might have anticipated. in part because they had a lot of cash on the balance sheet sitting there earning nothing. this is a theme we've been talking about so often in these markets. the cheap costs of debt, the use of cash on balance sheets that is not really earning a great return. that is part of that. you get very accretive free cash flow. by the way, comcast reporting this morning, 20% increase in the dividend, $2 billion repurchase program. take a look. this is the story many people in the markets have been following. one reason comcast stock has been so strong over the last couple of years. that increase in operating cash flow from the company. don't want to forget ge here. those shares up almost 3.5%, comcast shares up about 6%.
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it shows ge had been up as much as 3.5%. no return as much as $18 billion to shareholders this year in the form of purchases, dividends and the like. are taking in $18.1 billion from this deal. so that stock also reacting positively. >> you made the point earlier that both of the stock should rise, when not a huge amount is changed on the balance sheets. >> it hasn't. it's a matter of sort of money moving within the markets, except that general electric is allowed to trade more purely as an industrial. >> looking at it that way, they knew this was all going to be divested over time. but you're also putting cash to work that is otherwise sitting there -- investors have been pushing comcast which has always taken a conservative approach to leverage on its balance sheet, much different than other cable companies, to use more of their cash. to lever up a bit. not that they're getting out there -- >> you frame it as the ultimate insider buy. increasing exposure now to the
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business that it owns, or at least the content. which is a vote of confidence. >> a series of interviews on cnbc indicated that the opportunity to buy down the road would have been more expensive perhaps than they thought now. maybe they were able to work a better deal in terms of the -- i like to understand the background of these things, than might otherwise would have been appreciated. there were the accretive equity rights, a point of leverage perhaps in negotiations with ge. >> he made the point now that you buy now, you buy early, you buy ahead of it fully priced. shareholders able to be a part of the upside, the entire upside of this transaction. that's also important. >> in the meantime, we should mention according to our staff that the comcast sign has now gone up above cnbc's headquarters already in new jersey. >> really? >> oh, yes. >> the ge sign is dark on the top of 30 rock. >> correct. coming up snake eyes for the atlantic city casino, saddled with more than $1 billion in
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debt. hired a restructuring team to explore options for the firm, according to the "wall street journal." it's a departure from the optimism for the ceo when we talked to him at the casino's launch a little less than, what was it, one year ago. take a listen. >> we expect june will be better than may. and of course, going into the summer season, we're hopeful july, august, september, october, we'll do very well. i'm not paying too much attention to the early numbers. you know, i think our first goal is to make sure that when guests come in, they're happy, they have a good time and they want to come back. >> the problem was that january's figures weren't so hot. the journal adds that revel has been bailed out several times since opening in april. and in a credit agreement for the fourth time. the man who could be the next treasury secretary is being grilled on capitol hill even as we speak. if confirmed, will jack lew take
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a hard line on the nation's banks, given that he worked for citigroup and they paid him a $1 billion bonus in 2009. financial analyst mike mayo will tell us how it could impact the sector ahead. plus, costco pays its employees more than the minimum wage. jim sinegal will tell us of what he thought of what president obama said last night. today is gonna be an important day for us. you ready? we wanna be our brother's keeper.
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live shot of jack lew, the former budget director and white house chief of staff, nominated for treasury secretary, testifying in front of the senate finance committee, reading his statement right now, which does go a bit into his history at citi. which will be no doubt one of the talking points today as he faces that hearing. more headlines as they become available. in the meantime, here on set, talking about the sequestration countdown which has begun. a point the president touched on in his state of the union address last night. senator john barrasso of
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wyoming, chairman of the public policy committee joins me here. we talked about the laundry list of initiatives. not a single dime added to the deficit. you don't believe it. >> no, the americans aren't going to be fooled twice. he said that about the health care law. we now have a health care law that is unaffordable. it's unworkable. and very unpopular. but it's added significantly to the deficit. so i think the american people see right through this president on this. >> defenders this morning will say, this is not a $1 trillion stimulus package like it was in years past. these are smaller initiatives that could be paid for if tax revenues go up, if growth goes up. is that a reasonable defense? >> it's a very big laundry list that's going to be very expensive, which is why we always want the president to submit a budget. now, he's been late on his homework assignment for that. we want to see that. the senate hasn't passed a budget since before the ipad was invented. we need to pass a budget, we need to see what the president
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is proposing because there's real costs to so many of these things. >> the market is always hungry to trade off anything in the speech. hard to do sometimes. definitely hard this year. no mention of keystone pipelines, no mention of liquefied gas, exports. what did you make of his energy policy and how much can he potentially do with some of these executive actions? >> i think he could hurt the economy significantly as he focuses on emissions. he wasn't able to get anything passed like the one he mentioned in the mccain/lieberman bill. that failed when the democrats were in control of the house and senate with him in the white house. you need to think about energy security for the country, as well as economic growth. and environmental stewardship. what he wants to do with his executive orders i think is going to hurt our economic growth. >> minimum wage, a big talker this morning. we have a bunch of retail and hotel executives saying it would affect our business, probably wouldn't affect our hiring plans
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overall. but you want the market to price itself in what a job is paying someone. >> i'm opposed to raising the minimum wage. i think the market determines that. we want to focus on maximizing opportunities for all americans, which is what marco rubio talked about in his response. >> raising it already above the federal minimum wage. >> the states get to decide what it can do. i think it hurts the economy. >> if there was a sweet spot in terms of compromise, are we left with immigration? is that the number one potential result of all of this? >> i'd like to actually get a big deal economically, something like ronald reagan and tip o'neill put together 25 or so years ago, where you actually do overall tax reform, get more people back to work. really, the number one threat to our national security right now is our debt. and unless we focus on that, you know, the president made an interesting point about saddling young people, graduating from
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college with incredible education debts. but the amount of spending that president obama is doing in this administration is saddling every young person in america with incredible debt that they're going to have with them the rest of their lives. and that's just wrong. >> you're looking for a grand bargain? >> oh, yeah. >> do we need a short-term first before march 1st? >> i think it's unlikely anything's going to happen to ward off the sequester hitting on march 1st. initially it was the president's idea a year and a half ago. >> although everybody agreed. >> so you have this. and in the debates the president said it's not going to happen, still he's not offered a proposal of what to do with it. some of the taxes that the democrats talk about using to kick the can down the road just for a year, involve raising taxes on a lot of different things for ten years. so i don't think it's a reasonable way at all. to look at this. you need to actually cut spending. the president doesn't seem to be willing to do that. >> so do you think if the sequester takes place, the
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markets, investors, besse are in for a period of shock, a period of crisis? >> there's a continuing resolution coming up a couple of weeks later where you can actually take a look at this and say, well, we still need to do this level of cuts, but they're more intelligent ways to do it than outlined in the sequester. >> if you look at some of the analysis today in the "times," they argue his mission was to make liberalism palatable to those who would otherwise reject it. trying to move the ideological center of gravity in the country. is that remotely possible in your view? >> that seems to be what the president's talking about. you go back to ronald reagan, it's not the government, it's the solution, the government is the problem. marco husbandio made the points, it's not big government that solves our problems as a country, it's free enterprise, opportunities. marco was raised in a family, immigrants, hard working. my dad was a construction worker. this is a country of success
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through hard work, opportunity and i believe that's what the republican party is going to continue to focus on, growth, opportunity, and free enterprise. >> senator, thanks for your time. >> thanks for having me. thank you. >> john barrasso of wyoming. >> thank you, carl. rick santelli has two words for you -- currency manipulation. he'll explain right after this. the patient, presented with
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welcome baaing to "squawk on the street." today's wednesday edition, santelli exchange, with he'll call it shades of gray and maybe it won't be as exciting as the book but to some of us it is. you look at the g-7 statement or look forward to the g-20 meeting there is a topic that of course has been very up front in traders' minds down here because we have fx bids, foreign exchange trading but it's not made it to the total consciousness of all economists and analysts and that of course is currencies and currency manipulation. shades of gray. if we look at some of the g-7 statements, our representative from treasury, ms. bernard, she
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basically said, listen, i'm all for what japan is doing. they're trying to help their economy. if we look back in time, we know that ben bernanke ten years ago outlined a course pretty much that japan is taking today as the right way to proceed, but yet when you look at countries like the swiss who have pegged their currency to a level of 120 against the euro or listen to comments we'll have in a week, mexican bank governor augustine karstens, is he a nervous wreck because of the inflows he hases to deal with at this time where investors are trying to find a place to put their money, highly liquid, but what is the difference between outright currency manipulation versus the collateral damage to one's currency based on central bank programs? well, my mind, very little, but obviously in the minds of many leaders of g-7 developed
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economies, there's a huge distincti distinction. i think back a couple of years when quantitative easing was playing havoc with the dollar, softening up because it is the collateral damage in this instance and the world was distressed about its impact on food prices. ben bernanke doesn't need to worry much anymore because we have now taken the issues against ben bernanke and they've really gone more global and the japanese are the biggest offenders, but in the end when you don't have a standard and you have printing and fiat currency, what level of value is real? i think that distinction is mularkey and in terms of jack lew coming up to his hearings shortly, cayman islands, maybe nobody cares but me, one group, filibustering or cayman islands, not good for mitt romney but okay for jack lew, you know what? it's okay for everybody. i wish these politicians would grow up. they created this horrible tax
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code and there's nothing wrong with having your money in the cayman islands, even though no politician is going to be upstanding about it when it's their man under the microscope please washington, get some bearings, get some gps, get that voice that says recalculating, recalculating, you know, we hear it all when we make wrong turns. carl, melissa lee back to you. >> great point, rick. cayman islands might be a great point that might come up in the questions. the confirmation hearing for jack lew is beginning. let's listen in. >> in order to get that lower average rate one has to take advantage of special tax provisions, we should have a simpler tax code. >> i don't have a lot of time here but if you could briefly comment on something that's been in the press, and that is investment in the cayman islands, what was it and how did that happen and why'd you choose that investment and what benefits did you receive?
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>> senator, while i was an employee at citigroup i had the opportunity to make an investment in a venture capital fund, a private equity fund that was designed to invest in emerging economies around the world. it was an opportunity that looked to be riskier than other investments i've made in the past, i've had a conservative personal investment philosophy and thought it was an appropriate risk to take given the higher possibility of a return. i invested in the fund as an employee and i divested from the fund when i was confirmed for a position in the office of government ethics recommended or directed a divestment. my benefit was really very small in the sense that i took a loss when i sold the investment. i always reported all income. i always paid any taxes that were due. >> why was the investment in the cayman islands? >> senator, i don't know why it was organized. i was not involved in setting up the fund. >> did you know at the time it was cayman?
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>> at the time i invested i was aware it was an international fund, investing in emerging markets. i knew that much of the personnel for the fund was based in london. i actually didn't know at the time what the address of the partnership was. >> and when did you divest? >> i divested in 2010, when i became omb director, and the fund was disclosed in all of my prior confirmations and all of my sf-278s. i'm not aware of any tax benefits i got from participating in the investment. >> but did you pay taxes on that investment? >> i reported all income related to the investment on my tax forms, i paid all my taxes. >> but did you earn taxes on that? >> i lost money on the investment so in fact i lost money which i didn't have a great deal of income. >> okay. thank you. senator hatcher?
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>> thank you, mr. chairman. i appreciate it. following the financial crisis, many financial firms including citigroup have taken actions to improve their performance operations and responsibilities. my question is about citigroup to you mr. lew, related to the time you were there, and not to current citigroup operations. frankly, i do not believe that i have a good understanding -- >> we'll take a break here but of course the q&a getting quite interesting regarding jack lew's cayman islands investment and now his experience at citi. we'll get you headlines as they happen. lot more reaction to the q&a when "squawk on the street" comes back. transit fares! as in the 37 billion transit fares we help collect each year. no? oh, right. you're thinking of the 1.6 million daily customer care interactions xerox handles. or the 900 million health insurance claims we process. so, it's no surprise to you that companies depend on today's xerox for services that simplify how work gets done.
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like charles' swing. i heard that. last night's "fast money" brian roberts was detailing his $17 billion deal with ge. >> it was an exciting show, unexpected. >> what's coming up tonight? ? what we have planned but we don't know if we'll get it, cisco beyond the conference call and marc faber >> is he any cheerier? >> he's pretty gloomy and doomy as opposed to boomy but we'll see where he stands tonight. carl to you. >> thanks so much. we get more on the jack lew confirmation hearing going on in washington, take a quick listen to some of that.
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>> -- alternative investment business. as the chief operating officer i was responsible for a number of broad-ranging management of the business kinds of activities. i had substantial responsibilities in terms of large national and international field organizations systems. i mentioned to senator bachus, i went to montana to visit our financial advisers because i went around to make sure our business was working on the ground. in new york i was responsible for the budget of running the business, which was a very large as i say national/international operation. i was not in the business of making investment decisions. i was certainly aware of things that were going on. i was working in a financial institution. i learned a great deal about the financial progress. i wasn't designing them and i wasn't opining on them. i take away from that experience a deep understanding that there
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are risks we need to be very much on guard against and i would be delighted to discuss those policy considerations as we go forward. you know with regard to specific e-mails and phone calls, it's quite a number of years. i don't recall specific conversations. there was a very bad financial situation going on in that year. there were products that were widely understood to be troubled, so yes, i was aware that there were funds that were in trouble. i didn't have responsibility for the funds themselves, but i was aware that those difficulties were going on. >> my time is up, mr. chairman. >> following the early bird rule, next senator on the list is senator schumer. he's not here. senator grassley? >> jack lew the treasury secretary nominee responding to questions from senator hatch regarding his time at citi,
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which republicans have said is among their chief concerns. we bring in senior economics reporter steve liesman who has been following that earring. eamon said earlier they were going to try to knock him around a little bit. looks like that commenced. >> it doesn't seem like they really landed gloves there. hatch was unable to follow up. he pointed out, hatch pointed out that there were these investments that were in trouble at citi, as the cfo he asked what you knew about it and lew definitively said i was not responsible for investment decisions at city, and i was just going to say he said he was aware that there were funds in trouble but he did not have responsibility for those funds. so that seems like the primary area. he was asked by bachus by the way, the democratic side a preemptive question, bringing out the witness' potential pitfalls about the funds in the cayman islands. again he said i did not know that fund was based in the cayman islands initially and he received no tax benefit from it.
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in fact, he sold it at a loss when he rejoined the government. carl, you and i have covered these, many of these hearings over the years. this is not even close to landing a blow. now if hatch has other information that lew in fact did have responsibility for this, that would change it but right now, we'll see, by the way, senator grassley another republican is questioning again. the main question i heard earlier today carl was when hatch said we know you're a budget expert but there is he aa lot more involved with being treasury secretary. what do you know about that stuff, the financial regulation and how markets work. >> that was an interesting line of questioning earlier on. e eamon javers gave us a good curtain raiser this morning. the kcayman islands investment, if you criticize romney for it do you criticize a democratic nominee for it, too? >> that's the question a lot of republicans are raising, the president himself said this
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investment is not appropriate. it's basically a tax dodge. why would he nominate a guy for treasury secretary who participated in that sort of thing. i thought lew handled about as deftally has he could. orrin hatch said get out your pencil, i have a list of questions and you might want to take these down. hatch an interesting pitfall hatch asked him about e-mails he was included on or cc'd on touring h during his time at citi. hatch sounds like he's going after something specific. lew ducked the e-mail and said i don't remember an e-mail i was cc'd on. you wonder whether or not senator hatch has something specifically he's pointing to about jack lew's tenure at citi. he talked about his time at citi is the as at designing financial products or opining upon them thus presumably getting himself out of the blame for anything citi did in the run-up to the financial crisis. >> we know you'll keep an eye on
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the hearing, it's not over by any stretch of the imagination. hopefully it won't go five minutes like you said on twitter not too long ago. dan bartlett, ceo of nolan strategies, spent seven years working in the white house under president george w. bush. he joins us from austin. welcome back. >> how are you doing, carl, good to be with you. >> interesting some of the confirmation hearings are happening the day after the state of the union where there's some bruising left over from what the president said last night. how does that affect the dynamic today? >> as far as the confirmation hearing i don't think it will have a direct impact on whether jack lew will be confirmed or not. i think you're seeing a line of questioning where the republicans want to point out the hypocrisy of the attacks you saw month after month, week after week, president obama against mitt romney particularly about the cayman islands and they want to exploit a little bit of jack lew's weaknesses when it comes to monetary and fiscal policy coming from the budget standpoint, i'm seeing
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the classic type of washington hearing where there's going to be grandstanding and there's going to be a line of questioning but nothing that suggests to me from last night from the president's speech or from the early hours of questioning at the hearing today that anything is going to change the trajectory of his confirmation. >> so you do think he's in. we have hagel of course getting past some committee yesterday. are republicans offering up a robust enough opposition to whatever the president puts forward? >> well, it's always a challenge when it comes to a president's team, whether it be his direct staff or in those key positions like the department of defense, or the treasury, and it was very shrewd on the part of the broader strategy of this president in his second term, an attempt to divide republicans to put them on the defensive, nominating a republican like chuck hagel, even though he had his own issues within the republican party over the years, ones that we grappled with when
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i was in the white house but to the public at large, here is the president offering a republican nominee to be the secretary of defense. that's very difficult for republicans to fight back against, and that's why it was a shrewd political move, whether he's the right person for the job, that's a different question but from a political standpoint, the white house has been smart and shrewd about the types of nominees they're putting forward to serve in his cabinet. >> that leads us to the sequester to some of the initiatives that the president rolled out last night to his promise that it wouldn't add a single dime to the deficit, and to the gop response and how rubio managed that in both substantively and skilisticstyl last night your report card? >> anybody sitting out in america from a business p perspective wanting to look to washington to see if there was going to be any kind of fissures in the cracks or in the stalemate of politics particularly when it comes to
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the fiscal crisis we're facing and the long-term spending challenges and deficit there was no indication whatsoever that the president was going to change from where he indicated in the inaugural address, and in any other messaging opportunities he's had. he is committed to bringing the republican party to its knees on these issues and i think the republican party feels that in the short term and probably more so in the long-term, that it's in their interest to fight him tooth and nail particularly on the sequester so i think we're going to go right up and probably see the sequester go into place. i think republicans feel bolst r bolstered by their position. it's interesting if you want to get a sense of where the politics are on capitol hill and in washington. the issue that the president was most passionate about was the one that he has the least chance of passing and that is gun control, and the issue he has the best chance of passing something on, he was least passionate about, and that was immigration reform. it kind of tells you about the dynamic between the president and the congress and the politics in washington on those
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two big issues. >> that is very interesting. you know, dan, regarding the sequester, if we are in for a prolonged period of debate about spending in the country, it's not like the markets are providing any urgency either with the nasdaq at a 12-year high, the dow close to a five-year high. i guess that gives both parties some room to play a game of chicken. >> i think that's the case and in some cases the market kind of builds in this, because there's touch a long windup to this but they're also seeing the history and the history is well, they'll all step down at the last minute. it always happens, they'll kick the can down the road further or do something to give us more breathing room. i don't think that's going to be the case here so i don't know if that means that when it actually does go into sequester we'll see a more precipitous dropoff in the markets or if it's one of the things where the relevancy of what's going on in washington is just something that businesses and those who are buying and selling stock are
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just more and more tuning out. it will be interesting to see how that plays out, if the sequester goes in place, and as i sit here today i think it probably will. >> finally, i wonder if there's anything else strategically republicans could do, should be doing, if you think rubio is the one that should carry that water in the months ahead? >> well, this will be yet another plea that when a republican, when the party has somebody on the rise politically and has such potential like a marco rubio, please don't make them do that response in the state of the union. when i was in the white house we always would be curious who the democrats were going to put up. it is a fundamental disadvantage. there is no way to have any upside from doing a rebuttal to the state of the union address. there is only downside. what are we talking about today? we're talking about water. we're talking about what he was doing scratching his head, itching, he seemed nervous. those types of stylistic things, the same things that tripped up bobby jindal a couple years ago,
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so if the republicans are wise in that regard, if anything else, please, don't put our rising stars in that environment ever again. >> it will be interesting to see who is willing to take that gig next year. dan, it's great having you as always. talk to you soon. >> good to see you, carl. >> dan bartlett. we'll continue to monitor the confirmation hearing in the lew hearings, get you any breaking headlines. mark zuckerberg is the talk of silicon valley not because of facebook. find out why high-tech royalty and political clout are meeting on the west coast and santelli already covered cayman islands investments. going to talk some minimum wage a little bit later on, rick. >> we definitely are. he's a big guy stature wise but a calm guy, not today. join us in about ten minutes, what's got dan stessidge riled up? his passion on minimum wage, be there. it's going to be enjoyable.
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treasury secretary nominee jack lew facing questions from the senate finance committee right now, monitoring the hearing and we'll bring you headlines as they happened. he discussed his cayman islands investment structure in which he lost money. had to sell it when he went to omb and discussing his time at citi as the coo of alternative units. groupon responsible for some big
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gains today, josh lipton is at the market flash desk with more. hey josh. >> hey carl, groupon that's right enjoying a nice pop this morning, analysts at stern energy upgrading groupon to a buy with a price target of nine bucks. the analysts saying the risks largely priced in, greater conviction teg clients in the company's ability to execute internationally and its position within mobile and valuation compelling. grew upon up 13% this year though down 70% since its ipo in november 2011. carl back to you. mark zuckerberg is having a few friends over at his house tonight hosting a fund-raiser for republican governor chris matthews of new jersey bidding for a second term in november's election. julia boorstin is live in palo alto outside zuckerberg's house with that story. good morning, julia. >> reporter: good morning to you, carl. that's right, mark zuckerberg likes chris christie and tonight
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he's holding his first fund-raiser but showing christie's bipartisan appeal beyond the gop race. zuckerberg attended a high-profile dinner with president obama and hosted town halls for president obama at facebook. zuckerberg donated $100 million to newark public schools which announced with governor christie and new york mayor cory booker. >> we're starting a $100 million grant so the mayor and governor can have flexibility to implement new programs in newark and turn newark into a symbol of educationalle examinence for the whole nation. >> zuckerberg is stepping up his educated flan pi. this past december he and his wife donated 18 million facebook
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shares to the silicon valley community foundation. he's contributed $10,000 to facebook's political action committee which donated $267,000 to both democratic and republican candidates over the past two years but today's event does face some opposition. the democratic governor's association posted a petition earlier this week to pressure zuckerberg to cancel his fund-raiser. it has pulled the petition down. it's no longer up online. an organization called credo action is planning a protest ahead of the event this evening. the event tonight is private. we hear the guest list is focused on zuckerberg and his wife priscilla's friends. maximum donations is $3,800, the new jersey limit and we expect carl some big silicon valley heavy hitters to be here tonight. back over to you. >> i have a feeling that driveway is going to get more interesting in the next few hours. thanks, julia boorstin in palo alto. when we come back, how big banks
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could be affected with jack lew as secretarsecretary. "squawk on the street" is back after a quick break. all stations come over to mission a for a final go. this is for real this time. step seven point two one two. verify and lock. command is locked. five seconds. three, two, one. standing by for capture.
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treasury secretary nominee jack lew facing questions on capitol hill right now at the senate finance committee hearing. we're monitoring that hearing. we'll bring you headlines as they happen. he's worked his way through his cayman islands investment, his time at citi and just now recently said a subject he knows more about, budgets, it would be challenging to lower the corporate tax rate to 25%. more headlines of course will be forthcoming in a moment. our capital markets op-ed, gary kaminsky has a guest. >> i'm here with charles cantor, for those that may not know i did spend two years at new berger berman before joining cnbc.
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former colleague, you launched a long/short mutual fund recently and it's something i always wanted to do, basically a hedge fund available to the public delivering alpha on a daily basis. how did you get this off the ground? >> thanks gary. it's a fundamentally driven approach, we love tearing apart companies understanding how they're going to grow and deploy capital for our benefit. we do that on the long and short side. we're running it long by long 30% to 60, we ran it net long 45% last year. it's equity biased we have the flexibility to earn a reasonable risk adjusted return and tends to be seldom overlap and we enjoy a unique advantage of running a fundamentally driven approach at nue berger berman given access. >> i did have times on research trips with you so i know how you
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do your work. look at the longs, top five longs and we'll show the top five shorts in a second. dunkin' donuts is one of your top holdings. >> right. >> what do you no he that the rest of the sell side doesn't know to add value to a name like that? i know that's how you try to generate the alpha? >> on the long side we're looking for believable growth and companies that can provide a growing income stream to our investors, we can get both of those things. we think we understand the stability and the growth in the cash flows. they have a unique ability to double their footprint west of the mississippi, that will produce revenue and higher returns on capital. the franchisee has to put up the capital and dunkin' collects the royalties. i love high return on capital return businesses and dunkin ' is a high return. >> is that where you're capturing the vale? >> the analysts are concerned about the high multiple.
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i've been willing to pay a higher multiple for a great business and it's not a same-store sales comp. story. it's a unit growth story and they've got easily 10,000 units that can open west of the mississippi and this time around, dunkin'found a master franchise agreement that gives them good cash on cash returns. >> i saw coach, one that's been hurt in terms of what's happening in the luxury retail space. why are you short coach? >> the shorts as of december 31st, the thesis there on the short it's catalyst driven usually against earnings and thought with coach for the first time in a long time they faced a credible competitor in michael coors with a high multiple and feels post the conference call that coach has to head where michael coors is, to become a luxury retail brand and we're concerned about both what was happening in the whole channel.
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>> charles, you've been able to generate over the last 13 months positive returns 12 of the 13 months. i want to talk about the overall market quick before we have to go. you followed the junk bond market to look at the equity market. >> that's correct. >> the junk bond market is telling you stocks are topped out. are you concerned about the s&p when you look at what's happening in high yield? >> we've always thought of credit as being a great indicator on risk. i think the answer to that question depends on your time. there's no volatility in the equity market currently, no volatility in the equity market early last year as well. the credit market has been a little squishy lately but fundamentally we think the default picture remains pretty sanguine in the credit markets and if there was a meaningful pullback in credit that will be well by the pool of money washing around the system, and i think for longer term equity investors, those that can take the longer term that can live through the volatility, which is
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what our fund is designed around, i think they'll be well rewarded for taking the risk in the equity markets given how modest earnings expectations are. >> got it. charles, congrats on launching this fund. thanks for coming in, and you'll want to hear this call. i must give a little promo, speaking of hedge funds and long vsh short funds i'll be debating, you won't want to miss this this evening, "fast money" mr. anthony scaramucci, have hedge funds really become smart indexes? if you're not in the air, carl you'll want to watch that in the air, not miss tv. >> i'm going to race home, no doubt about that. good luck tonight, see you later. a few moments until the end of europe's trading day, we'll get their close in three minutes and the impact on our afternoon session with the dow down 59. [ male announcer ] at his current pace,
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still a few hours until the close here in the states but europe's getting their business closed right now. let's turn to simon hobbs at post nine. >> it is a higher close in europe at the moment. we got some interesting data out suggesting that the eurozone is pulling itself out of recession. industrial production -- >> the european markets are closing now. >> -- by 0.7% in december so higher across the board. lot of talk in europe and indeed outside the united states about currencies. the latest we have is that maybe the ecb is concerned about the rise in the euro, according to the german newspaper "bill." it could mean they cut interest
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rates down the line. the other interesting data is the degree to which france is falling away. jpmorgan has a note out today suggesting that france's position at the epicenter of the euro area is under challenge and today because of its poor growth, one government minister said in france or admitted in france it would not make its targets. the really important thing i need to more broadly tell you about europe is the dier hav di we're seeing in the way the stock markets are reacting to america and the teeing to which companies in europe are not beating the top line and bottom line as successfully as companies here in the united states. today's earners that disappointed you see here, ing cutting more jobs, societ generale is a huge store in norway, very disappointing. bp and shell amongst those that inevitably have their prices ajusted because they don't
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promise the prospect of a dividend. overall as you look at the difference between who the dow has done here in the united states and the top 50 blue chips in europe you will see that the dow continues through 2013 to make gains. that is clearly more of a struggle in europe and that disparity is potentially very important. people aren't chasing risk in europe as readily as they are here in the united states. i just want to mention one more thing to you, we are in the close period for the italian election which you know is a big wild card. we had some good news for those that are not wanting a change of administration, a pro reform policy, one of the key allies of silvio berlusconi, and a swing state has had now an official allegation of corruption against him by magistrates. that makes it less likely that silvio berlusconi can upset the apple cart. it is one reason why yields are lower on the ten-year in italy,
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and indeed they also, carl, managed to get away with a 30-year bond quite important locally. also they say barrosso says the free trade negotiations could start potentially at the end of june. >> talk about the transatlantic trade agreement, thanks so much. let's get to courtney reagan at the big board looking at what's moving on the floor. >> reporter: good morning to you, carl. just as europe closes it looks like we're sitting here at about session lows for the major averages, the dow down by about 54 points, the nasdaq the only one that is positive and the s&p 500 did cross a level we haven't seen intraday since november of 2007. we've pulled back since then. is this bullishness going to last or are we poised for a correction? we're watching the seesaw market at the middle of the day. health care overall is a lager, there are pockets.
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medicaid wellcare posting earnings beating on the top and bottom lines. the guidance was disappointing but shares there are higher by more than 10%, that's lifting other names in the medicaid space. if you moved on to commercial managed care you'll see some strength in commercial managed care, community health systems is at a 52-week high lifting other names in the space as well and we'll talk about tobacco, lorillard beating earnings but the overall volume of cigarettes didn't increase so much, just about 1%, shares higher by almost 6%, that's a nice looking chart for the day if you're bullish in that name. look at apple, we can't not talk about this. it's been a nice move earlier in the morning on decent volume. the nasdaq the outperformer of the day when we talk about the major indices, and we know that apple plays a big part in that. the big banks weighed down by comments from wells fargo cfo saying that mortgage lending
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likely to decline and wells fargo is the biggest u.s. mortgage lender. carl back to you. >> courtney reagan thanks, court. ge is one of the biggest gainers on the dow after news it's selling its remaining stake in nbc universal to comcast for nearly $17 million. ge executives hosting a web cast this morning to discuss that announcement and mary thompson is here with details. >> jeff immelt noting the second leg was better than the first. the ge strategy can be executed more quickly. >> it just gives us the ability to reward investors, reposition ge capital, reposition industrial, drive margins, lower our costs to investment growth and you know, continue to keep focused on increasing the industrial mix. >> they're sending ge to a
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four-year high with expectations of more good news to come. ge sees cost cuts through 2014 exceeding the previous forecast of 2 billion, meaning its target for a 70 basis point expansion in margins this year will likely rise as well. here's cfo keith sherin. >> for us it solidifies the 70 basis points. do we think in turn we have a higher number than 70, yes we do. >> ge plans to buy back $10 billion worth of stock allowing it to possibly reach its goal to cutting shares of jut standing under 10 billion by its strategy date. it's continuing to seek bolt-on acquisitions in the $1 billion to $3 billion range so ge capital can accelerate sales at the right price of non-core assets like its global mortgage portfolio and mortgage real estate. immelt was less specific who approached whom. it was ge's recollection comcast
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approached ge which again viewed it as a good and opportunistic sale. back to you. >> says a lot about the business we're in, thank you so much, mary thompson at hq. the president's proposition to increase the minimum wage raises questions as to how it would affect hiring and the question. santelli will weigh in on that from chicago. rick? >> i'll tell you what, carl, it seemed to have been one of the bigger talking points today on the trading floor, dan stessich is really calm, he would be my altar ego but he wasn't so calm today. dan, whether it's, you know, cayman islands, whether it's filibustering, whether it's minimum wage, if we can't get any congress to be more honest about these issues, is there any chance we're ever going to really know the truth about deficits, about obama care, about the really quantitative easing? let's go. what's wrong with the notion of minimum wage being a big answer
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to what's wrong with a lot of young people particularly that can't get work? >> you and i similar ages. i started at $1.80 an hour as a bagger in a grocery store. i didn't expect to stay at the position. my next stop a stock boy, $2.150 an hour, i had a stepping stone. had i wanted to stay on i would have gone into management things and never again did i have to worry about what the minimum wage was because i positioned myself to have a better job. the expectation right now is oh no, i need to have this given to me so i can live. you're not living on a minimum wage job whether it be $9 or $150 an hour or $20 an hour. >> come on dan, wake up, look at what the fed is doing. you print. i'll tell you what, maybe that is the answer, maybe we are wrong. make the minimum wage $1,000 an hour and have the fed just print and everybody can pretty much stay home and be very philosophical -- hold on a minute -- be very philosophical. i'm sorry, my throat was a
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little parched. i really enjoyed marco rubio's talk tonight, tea party favorite, swept in, in 2010. i don't know, everybody out there must live in glass houses, because yes it wasn't a great moment in tv, i try not to do it. he's a pretty young guy, hasn't been in politics long. i thought the substance of his speech was rather reaganesque, but of course that gets lost. you no he what it's about now? >> it's about the water. >> hey, i have the best detergent in the world, it makes your whites whiter than everybody else's whites. government is all marketing. >> what can you sell. they're all marketing where both parties, the democrats have been doing a good job of it. >> a great job of it. there is no doubt they know how to use social media better, they know how to do it all better. in the end i don't think getting an "a plus" for marketing is going to give an economy an "a plus" but $1,000 an hour fixes everything, just print it. >> look at the debt, why not have more debt?
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this is why they have to seriously discuss it, not with all the talking points. >> where i buy my doughnuts every day before i get on the train, if they make the minimum wage the owner is not only going to be mopping the joint he'll be making and selling me the doughnuts. back to you. >> thanks so much, rick santos i in chicago. is jack lew the right man for the job, what lew could mean for the future of financials. mike mayo will be with us next and the former ceo of costco gives his take on rising the minimum wage to $9 an hour, jim sinegal will join us live when "squawk on the street" returns. how do traders using technical analysis streamline their process? at fidelity, we do it by merging two tools into one. combining your customized charts with leading-edge analysis tools from recognia so you can quickly spot key trends and possible entry and exit points. we like this idea so much that we've applied for a patent.
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♪ i know you're no good but you're stuck in my brain ♪ ♪ i want to know why does it feel so good but hurt so bad ♪ coming up on "halftime" the march to new highs, the stocks that will take us there. is it time to change the way you invest on retail and as cisco sits near multiyear highs should you buy the stock ahead of the earnings? two trader, one heated debate at the top of the hour. the financials trading at a new 52-week high as the man who could be the next treasury secretary gets questioned on capitol hill. joining us for his take on how jack lew could impact the bank sector and to talk some activism
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as well, top analyst mike mayo of clsa. welcome back. >> thanks for having me. >> you have an interesting thesis, we've seen these activists move into a lot of the big names, you this i that trend is nowhere near being done? >> we are at a tipping point when it comes to shareholder activism. you've seen it in my space in the banks with morgan stanley, citigroup, state street, you've seen it in oil and gas, companies like hess and chesapeake, you've certainly seen it in the technology space most recently, and you're going to see a lot more shareholders stepping up to the plate and acting as owners, and i think that's a positive development for the stock market. >> when you say acting as owners, i guess you also mean, giving input on large strategic decisions, obviously all of that points to citi as a prime example. >> it's not just a large strategic decision. holding the feet to the fire for these executives at the top
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corporations, holding their feet to the fire and ensuring they're looking after my interests as a shareholder. in other words if i was talking to these managements i would say what are you doing to improve the efficiency of my company? what are you doing to improve my returns? what are you doing to hold my ceo and board of directors more accountable? what are you doing to improve my share price and that's a very positive development? >> what's going on at citi and the call among many investors for them to at least study a breakup of the bank. are these gadflies, or are their suggestions going to hold weight? >> as you know i recommend citigroup for the first time in five years. i have a new 60-page report out on citigroup but this is not a gadfly. this is serious. we have trillion asset management with a proposal that would require citigroup to analyze breaking up the company and report back to shareholders. citi tried to keep this off the proxy, which would go to the annual meeting in mid-april, and i think the sec is likely to
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decide in the next few days whether or not this proposal makes it on the proxy for citigroup's annual meeting so we'll find out shortly if shareholders will have a say when it comes to this. >> do you have thoughts as to whether it will be on there and if it passes? >> i don't see how the sec could not allow this on the proxy for the annual meeting and i don't see how shareholders could say yeah we agree with this. report back to us. you have a lot more information than we have. having said that, i think the threat of this being on the proxy for citigroup's annual meeting could encourage citigroup to take more significant actions before we even get to that point. >> you think key corps might be the next one to have a big activist come in? >> we had citigroup with trillion asset management, and morgan stanley with dan loew, trian partners with state street and the question is who could be
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next? there's no activist in key corp. i know right how now. two decades after the company was formed on the premise of creating economies of scale and they're 0% less efficient than they were two decades ago. they're in 15 disparate states around the country, maine, vermont, new york, ohio, colorado, idaho, oregon, washington, alaska, all i'm saying is how about the same proposal that trillion is pro posing at citigroup to analyze a better formation of the company? i'll go to the annual meeting and ask questions of the directors if nobody else does. >> finally, mike, jack lou is testifying as we speak. he's just recently said that dodd-frank implementation remains a priority for him. looks like he's going to get in, what does it do to policy risk overall to the sector? >> what we learn from going into the crisis is that government wasn't doing its job and investors weren't doing its job, so nobody was minding the store.
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what i'd prefer to see is investors step up to the plate with this activism, if investors don't do their job you're going to have government have a more heavy hand so my hope is that investors and those who represent them like me do more of the heavy lifting so that jack lew treasurer in government doesn't have to do as much. >> well said. mike always great to have you. thanks for coming by. mike mayo joining from us new york. jack lew is still getting questioned on the hill this morning. for more we turn to steve liesman who has been monitoring the hearing. >> it's safe to say that jack lew is likely to be approved as the treasury secretary here, there was never really much doubt about it, there were two issues out there, one is the cayman islands fund he invested in. the second was the issue of his oversight of citigroup when certain investments went badly there. he seemed to answer them satisfactorily to the point there was no follow-up here from
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the republicans to those questions. senator hatch came out with a couple of those questions, senator grassley as well, but that was really about it, carl. my take here is that the republicans are not moving forcefully here, certainly not in a coordinated way to attack this nomination. i think the issues are that the republicans oppose the policy of the administration, but not necessarily the nominee who will be implementing those policies, so very little doubt going in, maybe a 5% chance or a 10% chance that they were able to exploit these issues to blow up the nomination, but it looks like lou has passed through those. >> the full senate could vote by late this month or so. steve, thanks again. >> sure, carl. >> steve liesman monitoring the lou hearing. when we former ceo of costco jim sinegal will weigh in on the sequester, the president's statement on minimum wage and a lot more.
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president obama's proposal to raise the federal minimum wage likely to revive debates over whether the measure helps or hurts low income workers. costco supported increasing the minimum wage as a way to improve productivity and reduce employee turnover. joining us the cocounseleder and former ceo of costco jim sinegal joins us from saturday. good to have you back, good morning. >> thank you, carl, good to be back. >> we've said before anybody who knows the company well knows you costco pays their workers more than minimum wage but mcdonald's
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is the worst performing dow stock, a lot of people suspect it has to do with the fact people are worried what that would do to hiring plans to costs. is it a negative? >> i don't think it's a negative. in the final analysis mcdonald's is a smart company, they operate efficiently. i think they'll figure this out and come to grips with it and probably in the long run be beneficial for them relative to the workforce they have. walk me through this, what are they thinking, are they imagining this will become law on a federal level? >> my guess is that is the case. as you know there are some 18 or 20 states that actually have a higher minimum wage than what the federal rate is at the moment. i would guess that was the general reaction, the reaction is it's going to be an immediate
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hit but i think most businesses will figure a way to work through it and that will be good for the economy on the overall basis. $14,000 a year it's difficult to support themselves. >> it's one thing for an s&p 500 company to deal with a policy change like that. what would you say to a small businessperson who plemploys 50r less people? is it a make or break situation then in. >> not in my opinion but i'm not running that type of business any longer. i was at that point and at that point in time it was not something that was a serious consideration for us. we think -- you get what you pay for, and if you're paid better wages you'll get better people working for you and presumptively better productivity out of that. >> i'd love to get your broad thoughts on the speech last night, jim. you've been a supporter of the president. lot of initiatives, none of them extraordinarily costly, still taking place in the context of
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the conversation of deficit reduction and fiscal restraint. how do you do all those things and promise it's not going to add to the deficit? >> well, you know that's going to be for the budget people to figure out but i think all of these things that were mentioned, i think the president took a collaborative view last night and i think the mood of the nation we want collaboration and want some national interest to be considered, and so all of those issues are significant. i think the issues with the infrastructure are very important, the cost of repairing that infrastructure is not going to go down. it's going to go up over the years and it's got to be taken care of. the issues with immigration, another serious issue that i think the mood of the nation wants resolution on and i think reform is going to be important, whether or not it gets through completely as the president views it at the moment, that will be another question. it will probably be some variation of that, but all of those initiatives that were mentioned last evening i think
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are as you suggested none of them terribly costly, but all of them imperative relative for the nation to move forward. >> finally, jim, he mentioned the company is bringing production back to the states, caterpillar and apple, mentioned youngstown hubs the ones he wants to. er across the country. how much of that is bang for your buck in trying to get companies to put production lines back on home soil? >> i think it's great. i think that it's inertia. it's a type of thing that once it begins, you'll see other people coming up with ideas on how they can also take advantage of u.s. labor and you know, u.s. labor is very productive and i think it's something that's going to be a cornerstone of how we move forward with the economy. so i'm very encouraged by that, encouraged by some of the companies that are now taking action to do things on american soil. >> that's what's happening for
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sure, jim, on a broad scale and some big companies, too. jim as always great to see you. thanks so much. >> thank you, carl. >> jim sinegal, former ceo and cofinder of costco. senator marco rubio interrupted his official gop response as you know by taking a sip of water from that poland spring bottle. less than a week after tweeting his frustrations with apple and making a pitch for samsung. other than samsung and poland spring, what product would the senator be a perfect spokesperson for and why? tweet us @squawkstreet, your answers are next. it's delicious. so now we've turned her toffee into a business. my goal was to take an idea and make it happen. i'm janet long and i formed my toffee company through legalzoom. i never really thought i would make money doing what i love. [ robert ] we created legalzoom to help people start their business and launch their dreams. go to legalzoom.com today and make your business dream a reality. at legalzoom.com we put the law on your side.
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